Nordics

For the first time the European Central Bank waded into the primary market to buy covered bonds for its third purchase programme (CBPP3) this week, as eurozone issuers from the currency bloc’s core and periphery returned after a long hiatus. The central bank’s buying may not be so good for core issuers but the evidence so far suggests peripheral names who have been locked out are about to bask in its largesse.

Swedish Export Credit Corporation could become the next agency to debut in the green bond market, with its underlying documentation nearly in place — but as the issuer is reluctant to raise more debt this year SRI investors might have to wait until 2015 before they can add the name to their portfolios.

Credito Emiliano became the second issuer to take advantage of the European Central Bank’s (ECB) buying programme, launching a covered bond on Thursday. The deal led to a repricing of the issuer's curve in a move that could spur other peripheral names to return to the market.

Nordea Finland has issued the first deal from a eurozone bank that is eligible for the European Central Bank’s covered bond purchase programme. Though it was priced at the tightest ever spread for a 10 year deal for a non-German issuer, investors said it offered good relative value.

Moody’s says the Swedish Bankers’ Association recommendation that new mortgage loans amortise down to 50% of property value, from 70% currently, will help to slow the increase in household debt and is credit positive for Swedish banks and their covered bonds.

The Swedish Covered Bond Corporation (SBAB) was set to issue a €1bn deal at a historically tight level of 1bp over mid-swaps on a comfortably oversubscribed book on Tuesday. Although the issuer has been out of the market for three years and is considered a solid credit, the deal lacked some of the sparkle of issues seen earlier this month, possibly due to its soft bullet structure.

HSH Nordbank and the Swedish Covered Bond Corporation (SCBC) mandated leads for euro benchmarks that are likely to be launched on Tuesday.

DNB Boligkreditt returned to the euro covered bond market on Monday to issue its first deal of the year. The transaction looked set to price comfortably through mid-swaps, but it did not enjoy the same degree of price tension as recently issued and highly rated core covered bonds that are likely to be included in the European Central Bank’s third purchase programme (CBPP3).

Danske Bank opened books on Wednesday on a triple-A rated five year euro benchmark, its second euro deal of the year coming soon after its seven year sterling transaction early last week. A solid book build blew away Tuesday’s concern that a soft credit market and a series of upcoming potentially disruptive events may have turned the deal sour.

Danske Bank has mandated leads for a five year euro benchmark, its third benchmark this year and second in euros. The deal is expected to be launched on Wednesday.

The sterling FRN market picked up on Monday as Barclays was set to price the largest ever covered bond in the domestic currency and Danske Bank was poised to price a benchmark. The two borrowers follow Nordea Eiendomskreditt which attracted robust demand last week.

Nordea Eiendomskreditt has priced its first sterling covered bond backed by Norwegian residential loans. The £500m three year floater appealed to investors on a number of counts and provided competitive funding for the issuer.